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Cable/Video

Calix Strikes Back

2:10 PM -- Remember when Pannaway Networks bought the access division of TelStrat International about a month ago and proudly proclaimed that they would be going after the Tier 2/3 market leader Calix Inc. (NYSE: CALX)? (See Pannaway Goes After Calix.)

The basis of this argument was that TelStrat had been licensing the intellectual property of the F5 to OSI and that when Calix later bought OSI and Pannaway bought part of TelStrat, Calix therefore was now leasing technology from Pannaway. I don't really know what that means either, but the end result supposedly was that Pannaway could now cut into that Calix customer base because of this relationship.

Well maybe not after all. Kevin Walsh, VP of marketing at Calix dug a little deeper after we ran the story and found that the intellectual property connection between OSI and TelStrat was severed as a condition for Calix purchasing OSI. "We would never have done that deal without that condition," says Walsh.

Hmmm, interesting. That would certainly negate the basis of Pannaway's claims. But why did it take so long for that information to surface? And what sayeth Pannaway now? We're awaiting their reply.

— Raymond McConville, Reporter, Light Reading

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DCITDave 12/5/2012 | 3:02:22 PM
re: Calix Strikes Back nice one.

pannaway's always bugging us for PR. wonder why they're so quiet now?

ph
OSXman 12/5/2012 | 3:02:17 PM
re: Calix Strikes Back What's happening with the E5?
paolo.franzoi 12/5/2012 | 3:02:17 PM
re: Calix Strikes Back
Dead and replaced with OEMs from Zyxel.

seven
Polder 12/5/2012 | 3:02:16 PM
re: Calix Strikes Back Phil,

What are your referencing from Calix? A search does not turn up any new news.

Polder
OSXman 12/5/2012 | 3:02:16 PM
re: Calix Strikes Back That's what I thought.

Can you discuss the ramifications of this?

1.) Why was Calix unable to develop a satisfactory version of the E5? Bad architecture? Lack of design talent?

2.) Is the Zyxel product any good?

3.) How does Calix compete against the rest of the industry--Occam, Pannaway, etc.--with this Zyxel product?

4.) What happens when the large tier 2 carriers want to upgrade their Calix equipment?

TIA
paolo.franzoi 12/5/2012 | 3:02:15 PM
re: Calix Strikes Back Can you discuss the ramifications of this?

1.) Why was Calix unable to develop a satisfactory version of the E5? Bad architecture? Lack of design talent?

It turns out Access is hard and it takes a lot of work to make a good product. They tried to do the E5 outside of Petaluma and I think that just turned out bad.

2.) Is the Zyxel product any good?

I am sure it is competent and limited.

3.) How does Calix compete against the rest of the industry--Occam, Pannaway, etc.--with this Zyxel product?

They are being whittled away at the low end particularly by Occam. Their revenues have topped out and my understanding is that they are hiring people on part time status.

4.) What happens when the large tier 2 carriers want to upgrade their Calix equipment?

They will likely pick a new vendor. Problem is their is no direct replacement out there, although it is not clear that there needs to be.

seven
jackall 12/5/2012 | 3:02:13 PM
re: Calix Strikes Back
brook, no need to be so diplomatic. Outside of Petaluma? They outsourced to India and it didn't turn out bad like you suggest it was a complete and utter disaster and heads rolled.

What if you could choose between 10 good engineers and 75 engineers of dubious quality to get the job done. I wish Calix no harm, although I might one day have to give them the proceeds of the sale of my house, but I like to hear stories of shipping jobs abroad gone wrong. Schadenfreude anybody?
opticalwatcher 12/5/2012 | 3:02:12 PM
re: Calix Strikes Back "Their FTTH story is bad"

Didn't they buy Optical Solutions, one of the first companies to make equipment for and to deploy GPON? Has this not gone well?
paolo.franzoi 12/5/2012 | 3:02:12 PM
re: Calix Strikes Back
jackall,

I was trying to be gentle. If you want my actual view of Calix it goes something like this:

1 - They have no Tier 1 business, so nobody large cares about them in the least - there is no buyer.

2 - They have completely screwed the pooch on the E5 and OSI. They are getting their clocks cleaned at the low end by Occam. Their FTTH story is bad and they are slowly losing the high end there - there is no IPO.

3 - All of this means that their revenue has peaked and they have no exit strategy. They have business for a long while in front of them, but it is like any other terminally ill patient - just waiting for them to die.

seven
bollocks187 12/5/2012 | 3:02:11 PM
re: Calix Strikes Back
Calix, like so many other startups is doomed.

Here is why:

1) Outsourcing did not work
2) Product is over priced hence margins suck
3) Acquiring other companies was/is a big mistake....
4) Really.....none of the senior management team has experience in the Access space....that was succesful
5) Revenue growth and margins must suck hence no one has acquired them yey and they cannot go IPO

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